Editorial: Petrol tax playing with political fire

Persistent reports since late last year have had the Government periodically on the point of announcing a set of transport decisions, the centrepiece of which was to be an additional petrol tax. Again, yesterday, it was said to be "close to making final decisions" on the package which still, evidently, features an increased petrol levy. Latest indications are that this little outrage could be introduced to Parliament under urgency tomorrow.

If the Government imagines that the country has been suitably "softened up" for a petrol tax increase, it is making possibly the most serious political blunder of its term. Tax increases of any kind are electoral dynamite.

The Government came to office committed to an increase in the top income tax rate - more for ideology than revenue - and gave a commitment on its election card to otherwise hold personal and company tax rates and GST.

True, it said nothing about petrol excise or the taxes on alcohol and tobacco, which have been increased. But petrol is a much more sensitive product than those other targets of punitive taxation. There can hardly be a voter in the country unaware by now that the Government already collects many more millions from petrol sales than it spends on roading and public transport. Taxes account for about a third of the price at the pump, and only half of that taxation is invested in transport. The rest, more than $400 million a year, is diverted to general Government purposes. Now, motorists may be asked for more.

Petrol prices affect every household and business budget, directly and through the increased costs of products carried by smaller road vehicles. The Government depends on the votes of Greens, who would like to discourage road transport and, indeed, to minimise all transport. The Green Party co-leader, Jeanette Fitzsimons, says, "New Zealand urgently needs to shift towards a model of access and mobility based on localisation". The Greens would prefer people to walk or cycle and send goods by rail or coastal shipping. They would tax petrol with a vengeance.

Labour and the Alliance have cited a more pragmatic purpose - to pay for urgently needed roads and public transport, particularly in Auckland. The delays in the Government's decisions seem to be attributable to arguments over the respective allocations to roading and public transport, rather than the need for a tax increase. There is the prospect tomorrow that not only will the country be hit by a needless increase in fuel costs, but too little of the revenue will go to where it is most needed.

The neglect of Auckland's motorway development has been a national disgrace. The largest population concentration in the country is frequently reduced to snail pace, at untold cost to the economy, because the provision of roads has not kept pace with the growth of motor vehicles. The lag was well highlighted at last year's Auckland local body elections and struck a chord with voters, prompting the Government to prepare the package that has been under discussion within its ranks ever since.

Besides a petrol tax increase, the decisions are said to embrace private financing of road construction. This requires tolls to provide a return on private investment over an agreed period. At the end of the period the road is transferred to public ownership. It is an arrangement widely used in other developed countries and is the obvious answer to bottlenecks in the Auckland region. Tolls should be permitted only where there is a reasonable free alternative, but few places in Auckland could not satisfy that proviso.

Private enterprise will invest in roads where the demand is most acute and the solutions most logical. That would be a welcome change from the public agencies whose road construction priorities sometimes defy comprehension.

But if private finance is to be invited, why an additional tax? It cannot simply be for public transport. There is already an ample fund earmarked largely for Auckland's public transport plans. It is hard to escape the conclusion that a petrol tax increase would be merely a sop to Green ideology. The tax is abominable. Even this late in the day, the Government should drop it.